Latest CBO Projections on Reform Law

As part of its annual review of federal budget projections (a dismal document which all Americans should be required to read for its frightening implications) the Congressional Budget Office updated its projections on the effects of the health reform law.  (CBO Report)   The bottom line is that over ten years the net cost to the government of the coverage provisions will be $1.2 trillion dollars, less than they estimated in January 2015.  The agency is estimating that health insurance premiums, in particular ones for the plan type that federal subsidies are tied to, will be lower  than previously believed, resulting in lower subsidies; and that slightly fewer persons will enroll in insurance than earlier estimates showed.  The CBO thinks that insurance premiums per capita will only rise 2.2% from 2014 to 2018 and 3.1% from 2019 to 2025, excluding the effects of general inflation and demographic mix changes.  The flaw in these projections is that much of the slowdown in premium growth is due to greatly increased cost-shifting, which has meant that premium increases have been lower than actual medical cost increases.  That cannot and won’t continue.  We are likely nearing the amount of cost-shifting that employees and individual plan members can bear.  So I will be shocked if premium increases over the next ten years average what CBO is suggesting.  In actual dollar terms, taking all factors into account, CBO believes that the average cost of the silver plans to which subsidies are tied will increase 8.5% from 2016 to 2018.  This is a pretty substantial jump, one for which consumers are probably not well prepared.  In terms of insurance coverage sources, the agency has lowered its projections of how many people will lose employment-based insurance and of how many people will enroll in Medicaid and through the exchanges.  One item that jumps out from the report is that CBO says that the number of people enrolled through the exchanges will jump from about 11 million in 2015 to 21 million in 2016.  That also seems extremely unlikely.  After two years, I think we probably have about all the people we are going to get in the exchanges, and a ten million person jump in one year needs some explanation.  Finally, even if the CBO were correct about the number of Americans who will sign up through the exchanges, we are still left with 20 to 30 million uninsured people, far more than the Administration’s promise that everyone would have coverage.